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Ontario 









Energy Board 




: ANNUAL REPORT 1997 - 1998 



Ontario Encryy Board > Annual Rcpni 109? - 1091! 



Ministry of 


Ministers de 


Energy, Science 


I'Energie, des Sciences 


and Technology 


et de la Technologie 


Office of the 


Bureau du 


Minister 


ministre 


Hearst Block 


Edifice Hearst 


900 Bay Street 


900, rue Bay 


Toronto ON M7A2E1 


Toronto ON M7A2E1 


Tel. (416) 327-6715 


Telephone (416) 327-6715 


Fax (416) 327-6754 


Telecopies (416) 327-6754 




The Honorable Hilary M. Weston 

Lieutenant Governor of the Province of Ontario 



I hereby submit the annual report of the Ontario Energy Board. It reviews the events and 
activities of the fiscal year ending March 31, 1998. 



Respectfully submitted, 
/ Jim Wi 



Jim Wilson 

Minister of Energy, Science and Technology 



omigaqjOTRGY eoaub 



TABLE OF CONTENTS 



MESSAGE FROM THE CHAIR 



BOARD MEMBERSHIP 



OEB ROLES AND RESPONSIBILITIES 



A DYNAMIC ENERGY MARKETPLACE 



BOARD ORGANIZATION AND RESOURCES 



STREAMLINING THE REGULATORY PROCESS 



REGULATORY AGENDA: 1997-98 HIGHLIGHTS 



LIST OF PROCEEDINGS 



GLOSSARY OF TERMS 



2 

4 

6 

10 

13 

16 

19 

27 

35 



The Ontario Energy Board is located at: 

2300 Yonge Street, Suite 2601 

Toronto, Ontario M4P 1E4 

Telephone [416] 481-1967 or 

Toll Free in Canada 1-888-OEBOARD [632-6273] 

Fax [416] 440-7656 



Website located at httpy/www.oeb.gov.on.ca 

Copies of the Annual Report in English and in French and other OEB publications may be obtained through the Board. 

Photo by Tessa j. Buchan Photography. 

Design and production by Staigh 8T Green Communications Inc., Ottawa, Ontario. 



Printed in Canada on Beckett Expression containing 20% recycled fibre with 20% post-consumer. 




ISSN 0317-4891 



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IW! 111! 



18S8 





onsumer protection is the 
heart of the expanded role 

| envisaged for the OEB 
in the provincial 
I government's White Paper 
on electricity. 



The Chair 



MOVING 
INTO A 
FUTURE OF 
CHANGE 

I was honoured to be 
appointed Chair of 
the Ontario Energy 
Board in March 1998, 
and welcome the challenge of 
leading the Board into a future of 
change. We live in exciting times 
for both the gas and electricity 
industries in Ontario, and for 
their customers. The provincial 
government is proposing to open 
up the electricity market to com- 
petition. Meanwhile, competitive 
forces have been gathering 
momentum in the natural gas market 
for over a decade. These develop- 
ments create both opportunities and 
risks. In this dynamic environment 
the Board's regulatory responsibilities 
must and will change. 

What will not change is the Board's 
traditional role of protecting the 
consumer and preserving the safe 
and reliable supply and delivery of 



energy. The Ontario public can rest assured that 
consumer protection and system integrity will remain 
unswerving commitments of the Ontario Energy Board. 

During 1997-98, the Board took a number of steps 
to put the consumer first. The gas utilities were 
directed to develop a Code of Conduct to govern 
their relationship with both affiliate and independent 
gas marketers. The interim Code approved by the 
Board is designed to create a level playing field 
among suppliers, and ensure that customers are 
properly informed about the new choices available 
in the marketplace. 

This year the Board also proposed amendments to 
the legislation governing the gas sector that would 
empower the OEB to defend consumer interests 
during the transition to a more fully competitive 
market. One safeguard would be a requirement that 
gas utilities offer a standard supply option for 
consumers who prefer to purchase gas from the 
utility rather than from agents, brokers or marketers. 

Consumer protection is the heart of the expanded 
role envisaged for the OEB in the provincial 
government's White Paper on electricity. Subject to 
legislative approval of the government's proposals, 
the Board will oversee the electricity marketplace 
and regulate the monopoly parts of the industry. 
The Board has observer status on the Market 
Design Committee that is planning the transition 



to competition in electricity. Through this channel 
the Board has kept closely attuned to the emerging 
marketplace to prepare for the possibility of new 
regulatory responsibilities. 

A further priority for the Board this year has been 
the streamlining of the regulatory process. An 
example is the portfolio approach adopted in the 
Board's Guidelines for Assessing and Reporting on Natural 
Gas Distribution System Expansion in Ontario issued in 
January 1998. The portfolio approach to planning 
will provide the utilities with more flexibility in 
determining which expansion projects to undertake, 
while the Board retains overall regulatory control. 

In the same vein, the Board this year applied its 
Draft Guidelines on a Formula-Based Return on Common 
Equity for Regulated Utilities for the first time. The use 
of a generic model for calculating a fair rate of 
return is expected to simplify regulatory proceedings 
for the utilities and other stakeholders. 

In the past year, the Board has been gearing up for 
changing roles through a major organizational 
restructuring. We have strengthened our regulatory 
policy-making capability to help shape the ground 
rules for the new marketplace, as well as putting in 
place a heightened level of compliance monitoring, 
auditing and enforcement to hold regulated utilities 
accountable in a complex environment. We have 
also consolidated our corporate services to provide 
the necessary administrative and logistical support. 
I am confident we are ready for whatever challenges 
the future may hold. 



to an evolving marketplace. 
Ms. Rounding also made an 
exceptional contribution to the 
administrative justice community 
through leadership roles in national 
and provincial associations. 

The energy sector touches every 
individual, family, business and 
public organization in the 
province. I am looking forward to 
working with everyone interested in 
bringing to Ontario the benefits of 
a competitive energy market while 
maintaining the historic commitment 
to safe, reliable and accessible 
energy services. 



J^^cu^R^. 



Floyd Laughren 
Chair 



I would like to take this occasion to salute my 
predecessor as OEB Chair, Marie Rounding, who 
served in this post with distinction for six years. 
Under her direction the Board developed the 
capability and flexibility to respond effectively 



(As of March 31,1998) 



OiiluiiuEraylJuuiii > Annual ficpoil 198Y - 1998 




CHAIR 

Floyd Laughren joined the 
Ontario Energy Board as Chair 
in March 1998, leaving a 27-year 
career in provincial politics to 
take on the challenge of leading 
the Board. Mr. Laughren had 
been the longest-serving Member 
of the Legislative Assembly of 
Ontario as the MPP for Nickel 
Belt since 1971. His achievements 
include serving as Finance 
Minister and Deputy Premier in 
the Rae government, with respon- 
sibility for the former Ministries 
of Treasury and Economics, 
Revenue and Financial Institutions. 
He was also chair of the Policy 
and Priorities Board of Cabinet 
and sat on the Cabinet 
Subcommittee on Industrial 
Assistance. Prior to his election 
in 1971, Mr. Laughren taught 
economics at Cambrian College 
of Applied Arts and Technology 
in Sudbury and worked in the 
retail sector in western Canada. 
He has a business diploma from 
Ryerson Polytechnic University 
and a Bachelor of Arts in 
economics from York University. 



VICE-CHAIR 

Appointed Vice-Chair in June 1993, George A. Dominy 
has extensive experience in the energy field in both 
the private and public sectors. Prior to joining the 
Board, he served as Director - Electricity, Oil and Gas 
Branch at the former Ministry of Environment and 
Energy. Mr. Dominy holds a Master's degree in 
mathematics from Cambridge University. 



MEMBERS 

Edward J. Robertson became a Board Member 
in May 1992. Before joining the Board, he was 
Chairman of the Manitoba Public Utilities Board. 
He has extensive private sector experience in the 
United Kingdom, including service from 1972 to 
1977 as a Director of the Confederation of British 
Industries in London, England. He entered the 
Ontario Public Service in 1977. 

Having held positions in the gas industry and staff 
positions at the OEB, Paul Vlahos was appointed a 
Board Member in October 1994. Prior to his 
appointment as a Member, he served as General 
Manager at the Ontario Telephone Service 
Commission and taught at the University of New 
Brunswick. He holds a Master's degree in economics. 

H. Gail Morrison, a lawyer, was appointed to the 
Board in March 1996. Ms. Morrison, who joined 
the Ontario Public Service in 1982, previously held 
various positions in the Office of the Ombudsman 
and was most recently Executive Co-ordinator with 
the Environmental Assessment Board. She holds 
Masters' degrees in law and physics. 



Roger MLR. Higgin was appointed to the Board in 
September 1996. Prior to joining the Board, Dr. Higgin 
was General Manager and Chief Operating Officer of 
Unisearch Associates Inc. He held a number of senior 
positions in the former Ministries of the Environment 
and Energy, including Assistant Deputy Minister - 
Programs and Technology Division, and previously 
served as a member of the Ontario Energy Board from 
1988 to 1991. Dr. Higgin holds a doctorate in chemical 
engineering and a Master of Business Administration. 

Judith B. Simon, an environmental scientist, was 
appointed a part-time Board Member in May 1992. 
She previously held managerial positions with the 
Ministries of Industry, Trade and Technology and of 
the Environment, and was an energy planner with 
the former Ministry of Energy. She is currently a 
consultant specializing in environmental assessment 
and strategic planning. 

F. Anne Drozd is a fellow of the Institute of Chartered 
Accountants of Ontario. She is President of ACHOS, 
a management consulting firm. Ms. Drozd has practiced 
as a Certified Management Consultant since 1982 and 
has extensive experience in the regulatory environment. 
She was appointed a part-time Board Member in 
April 1993. 

Christine Elwell, a lawyer, joined the Board as a part- 
time Member in April 1995. She holds a Master of 
Laws degree from the London School of Economics 
and Political Science. Ms. Elwell has previously 
worked in the petrochemical and nuclear industries 
in both Alberta and Ontario, in labour relations and 
environmental policy, and is currently an Adjunct 
Professor of Law at Queen's University. 



Sally F. Zerker was appointed a part- 
time Board Member in June 1997. 
She holds a Ph.D. in economics from 
the University of Toronto and has 
been a professor at York University 
in Toronto since 1970. Ms. Zerker 
has lectured and published articles 
about the international oil industry. 



Terms Ending in 1997-98 

Marie C. Rounding completed 
her term as Chair of the Ontario 
Energy Board in February 1998, 
having served in that post since 
January 1992. A lawyer and former 
teacher, Ms. Rounding has held a 
number of senior positions with 
the Ontario Ministry of the 
Attorney General, with a focus on 
administrative and regulatory law. 
During her term Ms. Rounding 
was active in the administrative 
justice community through several 
federal and provincial associations. 

Pamela W. Hardie left the Board 
in April 1997 after nearly seven 
years of service. A lawyer, she 
joined the Board in July 1990 and 
was formerly with the Ontario 
Securities Commission and the 
Office of the Ombudsman. 

The Ontario Energy Board would like 
to thank both of these individuals 
for their service to the Board. 



Oitoiu Era tad -:■ Auimal Bf^iinl 1S8T - 19S8 



OEB Roles 

And Responsibilities 



ales must be just and 
reasonable for both 
consumers and 
shareholders. 



The Ontario Energy Board [OEB] 
is a regulatory tribunal of the 
Ontario Government, reporting 
to the Minister of Energy, Science 
and Technology* As an arm's 
length agency, the Board functions 
independently from the government. 

The Ontario Energy Board Act 
establishes most of the Board's 
responsibilities. In addition, 
the Municipal Franchises Act, the 
Petroleum Resources Act, the Public 
Utilities Act, the Assessment Act and 
the Toronto District Heating Corporation 
Act give jurisdiction to the Board. 



Ontario's Gas Pipeline System 



ONTARIO 







°°°ooooo 



LEGEND 

!••■•• TransCanada PipeLines 
....... Union Gas 

...... Centra Gas 

ooooo Great Lakes 
inaon Panhandle Eastern 
dooc Empire State 
...... Tennesse Gas 

Iroquois 



UNITED 
STATES 



* In October 1997, provincial energy responsibilities were 

transferred from the former Ministry of Environment and Energy to the 

new Ministry of Energy, Science and Technology. 



SETTING NATURAL GAS RATES 

The Board regulates Ontario's natural gas utilities, 
which are required by legislation to submit the rates 
they propose to charge their customers to the OEB 
for review and approval. The Board establishes rates 
for each natural gas utility following a public hearing. 
The rates cover the commodity cost of gas, passed 
through to the customer without mark-up, as well 
as the transportation costs to Ontario and the 
distribution and operating costs of the local utility. 

Where users purchase gas directly from producers 
or marketers, the OEB controls the rates that the 
utilities may charge for transporting, storing and 
distributing the gas in Ontario. The Board also 
establishes the price that the utility pays for gas 
under buy-sell arrangements in which, typically, a 
broker purchases gas on behalf of Ontario consumers 
from producers in western Canada and sells it to the 
utility for delivery to the burner tip. 

To determine rates, the Board first establishes the 
company's rate base, that is, the amount invested in 
assets dedicated to service. The Board also determines 
the rate of return that investors should have the 
opportunity to earn, and the revenue required by 
the utility to pay its expenses and make the allowed 
return. Finally, the Board decides the fair share of the 
total cost of providing service to be borne by each 
customer class - residential, industrial and commercial. 

In setting rates, the Board endeavours to strike a fair 
balance between the prices paid by customers and the 
rate of return shareholders of the utilities are allowed 
to earn on their investment. Rates must be just and 
reasonable for both consumers and shareholders. 



REVIEWING HYDRO RATE 
PROPOSALS 

Ontario Hydro is required by law to submit any 
proposed change in its bulk power rates to the 
Minister of Energy, Science and Technology, who 
then refers the proposal to the Board. Bulk power 
rates are the wholesale rates that Hydro charges 
municipal utilities and direct industrial customers. 

After a public hearing, the OEB submits its Report 
with recommendations to the Minister. The Board's 
role is an advisory one and its recommendations are 
not binding on Hydro. 



Chaired by an OEB staff member, the 
OPCC represents various provincial 
ministries who together consider 
the environmental and safety 
aspects of pipeline construction. 
Regional agencies also take part in 
the discussions as necessary. 

In conjunction with a pipeline 
approval, the OEB may also grant 
authority to expropriate land, and 
authorize pipeline crossings of 
highways, utility lines and ditches. 



REFERENCES AND GENERIC 
HEARINGS 

The Lieutenant Governor in Council [LGIC], the 
Minister of Energy, Science and Technology or 
the Minister of Natural Resources may refer a 
matter to the Board for a public hearing and report. 
The OEB's Reports are normally advisory in nature. 
The Board may also hold generic hearings on its 
own initiative on matters under its jurisdiction. 



PIPELINE CONSTRUCTION 

OEB approval is required to construct a natural gas 
transmission line in Ontario. Such projects generally 
involve large-diameter, high-pressure pipelines with 
substantial capital costs and environmental implications. 
The Board assesses whether the proposed construction 
is in the public interest by considering need, safety, 
economic feasibility, community benefits, security of 
supply and environmental impact. The OEB's 
Environmental Guidelines set out the Board's expec- 
tations for locating, constructing, and operating 
pipelines in Ontario. 



MUNICIPAL 
FRANCHISE 
AGREEMENTS 

Each municipality may grant a 
gas utility the right to provide 
gas service and use road allowances 
or utility easements within its 
borders. The specific terms and 
conditions of the franchise agree- 
ment require OEB approval. The 
Board has approved a model 
agreement which has been the basis 
for franchise agreements issued 
since 1987. 



Before a formal application is filed with the Board, 
a pipeline construction proposal is reviewed by the 
Ontario Pipeline Co-ordination Committee [OPCC]. 



Ontario Euciyy Board Animal Report 1997 - 1998 



Natural Gas Franchise Areas 




■ CONSUMERS GAS 
| UNION • 
J CENTRA 






&>*w 



* As of January I, 1998 Union and Centra are merged. 

CERTIFICATES 
OF PUBLIC 
CONVENIENCE 
AND NECESSITY 

Board approval, in the form of a 
certificate, is necessary to construct 
any works to supply gas in Ontario. 
Approval is granted only where 
public convenience and necessity 
support the extension of service. 



STORAGE AREAS 

Natural gas may be injected into 
a geological formation in Ontario 
only where the land is designated 
as a storage area by the LGIC. 
The Board recommends areas that 
are suitable for designation. 
Once the LGIC has approved 
designation, the Board may 
authorize a storage area's use. 
The OEB also determines the 



compensation payable to the owners of land where 
storage pools are situated, if the parties cannot 
agree among themselves. 

In addition, applications for drilling permits for wells 
within designated storage areas are referred to the Board 
for a report to the Minister of Natural Resources. 



OWNERSHIP CHANGES 

Under the legislation, a natural gas utility must 
obtain permission of the LGIC to sell its system or 
amalgamate with another company. LGIC approval is 
also necessary when any person wishes to acquire or 
hold more than 20 per cent of any class of shares. 
Applications for such changes in ownership of utilities 
must be made to the Board, for a hearing and report. 



MONITORING UNDERTAKINGS 

In consideration for certain approvals obtained from 
the LGIC, the gas utilities have provided specific 
undertakings. The Board is responsible for administering 
many of these undertakings or commitments. This 
role involves monitoring compliance with the terms 
of undertakings, approving exemptions and reporting 
to the Minister of Energy, Science and Technology 
or the LGIC. 



OEB Regulatory 


Activities 1997-98 










Case Type 


Applications 
Received 


Decisions* 


Orders 
(General)* 


Hearing 
Days* 


Franchise Approvals 


66 


9 


76 


3 


Certificates of Public 










Convenience & Necessity 


12 


5 


17 


8 


Pipeline Construction 


4 


3 


3 


24 


Reference from LCIC 


- 


1 


- 


- 


Reference from Minister 










of Natural Resources 


1 


- 


2 


- 


Natural Gas Rates 


16 


4 


6 


60 


Pipeline Exemptions 


3 


- 


4 


- 


Uniform Accounting 










Orders 


10 


- 


4 


- 


Undertakings 


8 


5 


- 


42 


Other Orders 
TOTALS 


5 


1 


4 


11 


125 


28 


116 


148 



* Includes cases /activities initiated this fiscal year or continued from prior years. 



A Dynamic Energy 




Onlaiiotajj'taii Aiuiual Uciioit 199V - 19S8 



he distribution of natural 

gas involves an extensive 
network of pipelines 
and storage facilities 
requiring substantial 
capital investments. 



Natural gas supplies nearly one 
third - about 32 per cent - of 
Ontario's end-use energy needs. 
Fifty eight per cent of residential 
energy, 49 per cent of energy in 
the commercial /institutional sector 
and 39 per cent of the province's 
industrial energy requirements are 
provided by gas. 

Electricity meets a further 18 per 
cent of Ontario's energy demand. 
Electricity drives information 
technology, lights and heats homes 
and businesses, and is an energy 
source for such industries as 
automobile manufacturing, pulp 
and paper and mining. 

The rest of Ontario's energy needs 
are met by oil, coal, wood and natural 
gas liquids, such as propane. 



NATURAL GAS 
SALES AND 
DISTRIBUTION 

Ontario obtains some 93 per cent 
of its gas supplies from western 
Canada through the TransCanada 
PipeLines Limited [TCPL] and 
related systems. The province also 
imports about 5 per cent of its 
gas requirements from the United 
States and produces approximately 
2 per cent itself. 



The distribution of natural gas involves an extensive 
network of pipelines and storage facilities requiring 
substantial capital investments. A monopoly arrange- 
ment is used to avoid costly duplication of facilities. 

Ontario has more than half of Canadian gas storage 
capacity, mostly developed from depleted natural 
gas fields in southwestern Ontario. Storage reservoirs 
are filled during the summer when demand for gas 
is low, and drawn down in winter when demand is 
high. The use of storage contributes to an efficient 
system with lower costs to customers. 



Local Distribution Companies (LDCs) 

Almost all natural gas in Ontario is distributed by 
three local utilities holding franchises and certificates 
to transport gas in specific areas of the province. 

The Consumers' Gas Company Ltd. (Consumers Gas] 
is Ontario's largest natural gas distribution utility, 
serving more than 1.3 million residential, commercial 
and industrial customers in central and eastern 
Ontario - including the Greater Toronto Area, the 
Niagara Peninsula, Ottawa, Brockville, Peterborough, 
Barrie and many other communities. It also provides 
a wholesale service to gas distribution companies 
outside its franchise area. Consumers Gas is a wholly- 
owned subsidiary company of IPL Energy Inc. 
(formerly lnterprovincial Pipeline System Inc.] 

Union Gas Limited (Union] is the second-largest gas 
distributor in the province and serves more than 1 million 
residential, commercial and industrial customers in south- 
western, northern and eastern Ontario. It also provides 
natural gas storage and transportation services for 






other utilities and energy market participants in 
Ontario, Quebec and the United States. The current 
company was formed by the amalgamation of the 
former Union Gas Limited and Centra Gas Ontario Inc. 
(Centra] on January 1, 1998 under the name Union Gas 
Limited. The amalgamated company is owned by 
Westcoast Energy Inc. References in this Annual 
Report to Centra or Union pertaining to dates after 
January 1, 1998 are to the amalgamated company. 

Natural Resource Gas Limited [NRG] is a privately- 
owned utility serving about 4,000 customers in the 
Aylmer area. 

The Board regulates the rates charged by these three 
companies. In addition, Ontario has five small gas 
companies that are exempt from rate regulation 
under the OEB Act, and two municipally-owned 
gas utilities that are not regulated by the Board. 



ELECTRICITY 
GENERATION, 
SALES AND 
DISTRIBUTION 

Ontario Hydro [Hydro], a 
provincially owned corporation, 
generates and transmits most of 
the electricity in Ontario. 
Created by provincial statute in 
1906, Hydro operates today under 
the Power Corporation Act. 

Hydro sells power wholesale to 
305 municipal utilities, who in 
turn serve 2,946,000 residential 
and business customers. Hydro 
also directly serves almost 1 million 
retail customers and 106 large 
industrial users. 



Direct Purchase 

Under the existing legislation, only LDCs are permitted 
to sell gas to end users in Ontario. In order to 
assist the development of a competitive natural gas 
market in the province, the Board has authorized 
purchasing options that allow gas users to obtain 
their gas supplies outside the province - either 
directly or through agents, brokers or marketers - 
and have them distributed by the LDC. 

This year the Ontario Energy Marketers Association 

succeeded the former Direct Purchase Industry 
Committee. The association brings together represen- 
tatives of agents, brokers and marketers to foster 
development of a more competitive market while 
ensuring consumer protection. The OEB has observer 
status in the association. 



Hydro's system includes 29,000 
kilometres of transmission lines and 
109,000 kilometres of distribution 
lines, as well as 69 hydroelectric 
stations, five nuclear stations and 
six operating fossil-fuelled stations. 
The demand contribution of these 
stations in calendar 1997 was: 
48 per cent nuclear, 25 per cent 
hydroelectric, 17 per cent fossil and 
10 per cent from other sources, such 
as independent power producers. 



Expanded OEB Role Proposed 

In November 1997 the Ontario 
government released a White Paper, 
Direction for Change - Charting a 
Course for Competitive Electricity and 
Jobs in Ontario, that proposes to 
end Ontario Hydro's monopoly in 
the electricity market and introduce 
competition for all customers 



Ontario Energy tad 



itii lie id 



beginning in the year 2000. The 
paper adopts the general direction 
proposed by the Advisory Committee 
on Competition in Ontario's 
Electricity System, chaired by the 
Hon. Donald S. Macdonald, which 
reported to the government in 
lime 1996. 



transmission and distribution tariffs, within a framework 
set by the Minister, as well as for regulating investments 
in the expansion of the transmission grid. The govern- 
ment proposes to direct the Board to examine, advise 
on and subsequently implement a performance-based 
approach to regulation that promotes efficiency in 
the monopoly parts of the industry to the benefit 
of consumers. 




The White Paper proposes to 
reorganize Hydro into three 
separate Crown corporations. 
One would be an Independent 
Market Operator, a non-profit 
corporation, that would act as an 
impartial manager of the market 
system and run an electricity 
exchange in which power is 
dispatched on a least-cost basis. 

Two commercial electrical companies 
would also be formed - one to take 
ownership of Hydro's generation 
assets and sell power in competition 
with other generators, and another 
to operate Hydro's transmission 
facilities and other energy 
businesses. The government aims 
to separate the transmission system, 
which remains a natural monopoly, 
from the generation business, so 
all competitors will have an equal 
opportunity to sell electricity 
in Ontario. 

Under the government's plan, which 
is subject to legislative approval, 
the Ontario Energy Board would 
receive an expanded mandate to 
oversee the electricity marketplace 
and regulate the monopoly parts of 
the electricity industry. The OEB 
would be responsible for regulating 



The OEB would also ensure that local distribution 
companies fulfill their obligations to connect and 
serve their customers, and would oversee the activities 
of the Independent Market Operator and promote 
the development of competition in generation and 
retail services. A further Board responsibility would 
be to ensure the licensing of all market participants, 
including generators, transmitters, distributors, the 
Independent Market Operator, retailers and wholesalers. 

Finally, the OEB would continue to regulate the 
natural gas business and would be responsible for 
the licensing of gas marketers. It would adopt 
compatible approaches on natural gas and electricity, 
particularly regarding the rules governing investment 
and affiliate relationships. 

In line with the White Paper, the government has 
established a Market Design Committee comprised 
of industry and consumer representatives to shape 
the rules for the careful and measured transformation 
of the market. The OEB has observer status on this 
committee, which submitted its first report at the 
end of March 1998. 





The OEB normally has seven full-time Members 
including the Chair and Vice-Chair, plus four part- 
time Members. It is a multi-disciplinary group 
comprising economists, lawyers, accountants and 
business people with knowledge of the energy industry. 



counsel to complete the public 
record, advise Board members 
on regulatory issues and assist 
in drafting decisions, reports 
and orders. 



Members are appointed by the LGIC for terms of 
one to three years. The Board normally sits in 
three-member panels to hear major cases, but two 
Members constitute a quorum. 



STAFF REORGANIZED 

In 1997-98 the OEB operated with an approved 
complement of 41 positions, in addition to the Board 
Members. As well, two legal staff were permanently 
assigned to the OEB but considered part of the 
complement of the Ministry of the Attorney General. 

During the year the OEB essentially completed a 
major staff reorganization to position the Board to 
meet the coming challenges and requirements in the 
gas and electricity industries. The OEB is now 
structured into two main sections - Regulatory 
Affairs and Corporate Services. 

Regulatory Affairs is responsible for the provision 
of professional, technical and advisory services to 
the Board. It has three components: 

• The Applications /Monitoring group processes all 
applications to the Board, participates in settlement 
negotiations and monitors the financial performance 
of regulated utilities. Staff manage the procedural 
aspects of hearings, take part in hearings through 



The Strategic Services group 
develops regulatory policy options, 
conducts research on current and 
emerging issues and undertakes 
strategic regulatory planning. 
Staff maintain contact with the 
utilities, stakeholder groups and 
other regulatory and energy 
bodies in Canada and the 
United States. 

The Audit/ Compliance/ Energy 
Returns Officer group conducts 
audits, ensures gas utilities comply 
with Board Decisions and Orders, 
performs compliance monitoring 
of undertakings by the utilities, 
and monitors various aspects 
of the utilities' financial perfor- 
mance on an ongoing and 
confidential basis. Staff also 
provide accounting, financial and 
technical advice to the Board. 



T 



he Board is a multi- 
disciplinary group 
comprising econo- 
mists, lawyers, 
accountants and 
business people 
with knowledge of 
the energy industry. 



Ontario Emm Board -■ Annual Report 190? - 1998 



Corporate Services consolidates a 
range of support services to the 
Board: 

• The Business Services and 
Planning group provides financial, 
human resources, administration 
and planning co-ordination services. 

• Information Technology and 
Operations manages and delivers 
office automation and technology- 
related services including security, 
telecommunications support 
and development and mainte- 
nance of computer systems. 



The Legal Services group provides legal advice to 
Board Members and staff on all legal matters that 
arise in a hearing or that come within the jurisdiction 
of the Board - including regulations, contracts and 
litigation - as well as acting as counsel to Board staff 
in hearings. 

The Board Secretary's Office performs all registrar 
functions including making physical arrangements 
for hearings, maintaining public files and processing 
cost awards. The group also provides case 
administration services to assist hearing panels 
and Board technical staff, plus communications 
and library services. 



Ontario Energy Board 



CHAIR 
F. Laughren 



VICE-CHAIR 
G.A. Dominy 



ADMINISTRATIVE 
■ ASSISTANT 
•F.A. Lee (Acting) 



BOARD MEMBERS 

FULL-TIME 
R.M.R Higgin 
H.G. Morrison 
EJ, Robertson 

PVlahos 

Vacant (I) 

PART-TIME 
FA. Drozd 
C. Elwell 
|.B. Simon 
S.F. Zerlcer 



DIRECTOR CORPORATE 

SERVICES 

**GA. Brown (Acting) 



ADMINISTRATIVE 
ASSISTANT 
M.E- Connor 



MANAGER 

BUSINESS SERVICES 

« PLANNING 

•*• B. Oden (Acting) 



_l 



ADMINISTRATIVE 
- CO-ORDINATOR 

I. Kimon 

FINANCIAL OFFICER 



TEAM LEADER IT 

fit OPERATIONS 

C.B. Mathis 

PROGRAMMER 

ANALYST 

T.C. Tran 



OFFICE SYSTEMS 

ANALYST 

G. Mayer-Powell 



BOARD SECRETARY 
PB. Pudge 



ASSISTANT BOARD 
SECRETARY - 
PH. O'Dell 

COMMUNICATIONS 
OFFICER 
L. Wilson 



BOARD COUNSEL 
I.Lea 



BOARD SOLICITOR. 
S.B. McOnn 



DIRECTOR 

REGULATORY AFFAIRS 

R.A. Cappadocia 

1 



ADMINISTRATIVE 

ASSISTANT 

H.K.Wong 



TEAM LEADER 

-STRATEGIC SERVICES 

M.O. McLeod 



RESEARCH S 

POLICY ANALYST 

PW. Conboy 

|X, Kwik 

Vacant (I) 



MANAGER 

APPLICATIONS/ 

MONITORING 

A.P Barrett 

I 

REGULATORY OFFICER 

H.Desai 

M.C. Garner 

B.L. Hewson 

C.J. Mackie 

N.|. McKay 

E.W. Sweet 

H.W. Thiessen 

E.K.Waill 

Vacant (2) 



TEAM LEADER AUDIT/ 

COMPLIANCE/ERO 

R.LPugh 



DEPUTY ERO/ 

UTILITY ANALYST 

M.J. O'Shea 

Vacant (I) 



S. Lila 






FILE 




FINANCE S 
ADMINISTRATION 






at INFORMATION 

CLERK 

AC. Macatangay 




CLERK 
D.R. less 






LIBRARIAN 
L.F. Buccilli 




SECRETARY 






CASE 




(Bilingual) 






ADMINISTRATOR _ 




D.G. Woomed 






N.E.Woodall 








).F. Sakauye 




RECEPTIONIST 

F. Ufond 


V-, 


/ 




* J.L Byrnes' home position 
** E.A. Mills' home position 
*** G.A. Browns' home position 


CLERICAL ASSISTANT 






/ 




G. Dragic 


^ -* 


s 


/ 















FINANCIAL REPORT 

As a provincial agency, the Board is subject to the 
financial and administrative policies established by 
Management Board of Cabinet and the Minister of 
Finance. The Ontario Energy Board Act authorizes the 
Board to recover its costs by assessing costs against 
applicants, usually the utilities involved in hearings 
and related activities. 

Following a hearing, the Board issues an invoice to 
the applicant concerned. The amount to be paid 



includes the Board's out-of-pocket 
and direct expenses attributable 
to the specific hearing, as well as 
a contribution toward the Board's 
fixed costs, such as overhead and 
payroll. In this way, the full 
cost of the Board's operations is 
recouped annually from the natural 
gas companies and Ontario Hydro, 
with no financial burden on the 
Ontario taxpayers. 



[ 



OEB Spending Analysis 1997-98 



Standard Account 


Estimates 
$ 


Approved 

Budget 

$ 


Actual 

Expenditures 

$ 


Salaries and Wages 


2,851,900 


2,851,900 


2,462,511 


Employee Benefits 


556,900 


556,900 


751,730 


Transportation & 


124,400 


124,400 


102,381 


Communications 








Services 


2,432,700 


1,232,700 


755,562 


Supplies & Equipment 
TOTAL 


130,100 


130,100 


325,045 


6,096,000* 


4,896,000 


4,397,229 



* Includes $1.2 million for the Electronic Regulatory Filing initiative which was not expended in the 1997-98 fiscal year. 
This amount was on holdback by the Ministry of Environment and Energy and was therefore not included in the budget. 



Uulaiiu tai iiuuid - Aiumal Kipil 1997 - m 




The Regulatory Process 



he Board believes a 
successful settlement 
I conference process results 
in OEB Decisions that are 
in the public interest and 
accepted by the parties, 
while saving time and 
money for all concerned. 



The OEB is working to streamline 
the regulatory process in order 
to reduce costs, improve service 
levels and achieve operational 
efficiencies. The Board is moving 
toward more light-handed regulation 
as the energy marketplace 
becomes more competitive. 



SETTLEMENT 
CONFERENCE 
GUIDELINES ISSUED 

The OEB often directs the parties 
to a proceeding to participate in 
settlement conferences before the 
hearing to clarify information, 
narrow issues and as far as possible 
reach a consensus. Settlement 
agreements are filed with the 
Board for approval. The Board 
believes a successful settlement 
conference process results in OEB 
Decisions that are in the public 
interest and accepted by the parties, 
while saving time and money for 
all concerned. 

For the guidance of all parties, 
the Board in late 1997 released 
comprehensive Settlement Conference 



Guidelines covering such matters as the rights and 
obligations of participants, the responsibilities of 
the conference facilitator, the role of Board staff, 
and how the Board deals with settlement proposals. 
The guidelines were developed in consultation with 
stakeholders. 



ELECTRONIC FILING GETS 
GO-AHEAD 

The OEB is moving from a paper-based regulatory 
process to an electronic one. To facilitate this 
change, the Board has launched an Electronic 
Regulatory Filing (ERF] Project in conjunction with 
the National Energy Board and several Canadian 
energy companies. Under way since early 1996, the 
project is designed to create an electronic system 
linking all regulatory participants for the preparation, 
exchange, use and reuse of regulatory information. 

During 1997-98 a second Cost-Benefit Analysis 
confirmed earlier findings that the ERF system 
would pay for itself within approximately three 
years, and a proof of concept site was developed to 
demonstrate some of the system's functions. These 
activities completed the Information Architecture 
Design and Development phase of the project. Based 
on the results, the Board - with strong industry 
support - decided to proceed with full implementation. 
The first electronic regulatory filing is targeted for 1999. 



INTERVENORS AND COST 
AWARDS 

Since the OEB's activities can affect a variety of public 
and special interest groups, Board proceedings 
attract a wide range of intervenors. The Consumers' 
Association of Canada, Energy Probe, Pollution 
Probe, the Green Energy Coalition, the Association 
of Municipalities of Ontario, the Ontario 
Association of School Business Officials, the Ontario 
Coalition Against Poverty, the Ontario Federation of 
Agriculture, the Ontario Native Alliance, the 
Industrial Gas Users Association and the Heating, 
Ventilation and Air Conditioning Contractors 
Coalition Inc. were among the dozens of parties to 
take part in OEB proceedings in 1997-98. 

Like some other tribunals, the OEB has jurisdiction 
to make cost awards at the conclusion of a proceeding. 
In November 1997 the Board issued a new Cost 
Eligibility Guideline, following a review of comments on 
a draft proposal circulated to all regulatory participants. 

The guideline stipulates that an intervenor in an 
OEB proceeding is eligible for a cost award where 
the intervenor primarily represents the direct 



interests of consumers in relation 
to regulated services, a public 
interest relevant to the Board's 
mandate, or a significant grouping 
of interests relevant to the 
Board's mandate. In addition, the 
Board has discretion to find an 
intervenor eligible for a cost 
award in a particular proceeding. 

The OEB invited potential partici- 
pants in the cost award process 
in future proceedings to make 
submissions demonstrating their 
eligibility under the criteria in the 
guideline. The submissions were 
assessed and the parties notified 
of eligibility. 

The Board continues to review its 
overall cost guidelines regarding 
the level of awards, again in 
consultation with participants 
in proceedings. 



Intervenor Cost Awards 1997-98* 


Case Type 


Proceedings 

(#) 


Cost Orders 

(#) 


Amount Awarded 
($) 


Natural Gas Rates 


7 


98 


2,152,395 


Pipeline Construction 


2 


2 


110,622 


Other Board Orders 


3 


9 


238,855 


Hydro: Bulk Power Rates 


1 


11 


551,871 


TOTAL 


13 


120 


3,053,743 



* Refers to fiscal year in which cost award issued. Hearings occurring in one fiscal year 
may not have cost awards issued until a subsequent fiscal year. 



Ontario LtorgjtaiH Annua! liepoit 1997- 1998 



MORE WRITTEN 
HEARINGS 

The ONGA/OEB Forum, which 
brings together senior representa- 
tives of the Ontario Natural Gas 
Association and the OEB, has 
called for more expeditious ways 
of dealing with straightforward 
cases. For some time the OEB 
has routinely used written hearings, 
rather than more time-consuming 
and costly oral proceedings, in 
franchise renewal applications. 
This year the Board began testing 
this practice in facilities cases. 
Written hearings were used for a 
number of non-controversial 
applications to construct pipelines 
and other natural gas works. 



INCREASED EMPHASIS ON 
COMMUNICATIONS 

In a rapidly changing environment, the Board recognizes 
the need for open and ongoing communications 
with stakeholders and the public. A number of steps 
were taken this year to improve communications with 
both the energy industry and the wider community. 

The OEB began constructing a Web site on the 
Internet, which will eventually provide instant on-line 
access to significant decisions and orders as well as 
news releases, key speeches, publications and other 
documents. A readership survey was taken to assess 
how well the monthly newsletter, the Regulatory 
Agenda, is meeting stakeholder needs. At the same 
time, all OEB publications were examined to gauge 
their effectiveness, and all aspects of customer service 
- such as routing of phone calls and response 
times - were reviewed. 




STRATEGIC PLAN 
REVISED 

The Board adopted a strategic 
plan in 1995 and has undertaken a 
series of initiatives set out in the 
plan, such as improvements to the 
hearing process, introduction of a 
performance measurement system 
and creation of an External 
Advisory Committee. This year 
the Board decided to review the 
strategic plan in light of changing 
circumstances. Board Members 
and employees participated in 
three strategic planning sessions, 
leading to the approval of a new 
strategic plan as well as revised 
vision, mission and values statements 
in January 1998. As the fiscal year 
ended, the OEB was finalizing an 
operational plan that will identify 
strategic priorities for 
implementation in 1998-99. 



During the year the Board Chair and Members spoke 
at such events as the Canadian Association of Members 
of Public Utility Tribunals Annual Educational 
Conference, the Canadian Independent Power Producers 
Conference and Trade Show and a Canadian Institute 
conference on electricity competition. The Chair, 
Vice-Chair and a Board Member appeared before the 
provincial Legislature's Select Committee on Ontario 
Hydro Nuclear Affairs in the fall of 1997. 

The OEB's External Advisory Committee continued to 
provide a valuable channel for two-way communication 
between the Board and its stakeholders on procedural 
and regulatory issues, outside the hearing room. The 
committee includes representatives of the natural gas 
utilities, brokers, marketers, Ontario Hydro, consumers, 
environmental groups and industrial energy users. 

Below are highlights of some major OEB proceedings 
conducted during the fiscal year ending March 31, 1998. 



Regulatory Agenda: 1997-98 Highlights 



Below are highlights of some major OEB proceedings 
conducted during the fiscal year ending March 31, 1998. 



REPORT ON NATURAL GAS 
LEGISLATIVE CHANGE 

(EBO 202) 

In late 1995 the OEB launched a review of the natural 
gas market structure after 10 years of deregulation. 
The process began with two stakeholder workshops 
and continued with a Board Report in September 
1996 followed by creation of a stakeholder Working 
Group that reported in May 1997. 

When advised in mid-1997 that the ministry would 
be assisted by the OEB's views on changes to the 
Ontario Energy Board Act, the Board decided to develop 
proposals for amendments to pave the way for 
further deregulation of gas supply-related services, 
while ensuring protection of Ontario gas consumers 
and the public interest. A consultation process on 
legislative changes was held with key stakeholders 
during August 1997. 

In December 1997 the Board issued an Advisory 
Report to the Minister of Energy, Science and Technology 
on Legislative Change Requirements for Natural Gas 
Deregulation. The report reaffirmed the Board's view 
that the legislative restrictions on end-use gas sales 
should be removed to allow unregulated gas sales by 
non-LDC suppliers anywhere in the province. 
The Board believes that removal of the barriers to 
gas title transfers will facilitate a move to full retail 
access and competition in the Ontario natural gas 
market. The Board also concluded that the public 



interest would best be served by a 
managed process to encourage 
market restructuring while pro- 
tecting gas customers during the 
transition. 

The Board found that to achieve 
such protection an industry Self- 
Management Organization [SMO] 
operating under administrative 
agreements with the OEB and the 
Ministry of Consumer and 
Commercial Relations should be 
established. The Board would 
licence agents, brokers and 
marketers and the SMO could 
administer the licences. Other 
key features of the transition 
include continued regulation of 
the monopoly storage, transmission 
and distribution function of the 
LDCs as well as improving the level 
of customer information about the 
deregulated market. 

The Board also proposed the 
replacement of the regulated 
system gas supply with a regulated 
standard LDC gas service. This 
standard supply offering would be 
maintained by the LDCs until the 
Board finds that market conditions, 
including consumer awareness, 
competition and industry self- 
management, have developed to 
the point where a regulated 
option is no longer needed. 



T 



tie Board believes 
thai removal of the 
barriers to gas title 
transfers will 
facilitate a move to 
full retail access 
and competition in 
the Ontario natural 
gas market. 



Ontario Eueigyltoaid j ; Annual limwl 1997 -1998 




Another recommendation in the 
Report was creation of a Market 
Design Task Force made up of 
affected stakeholders to develop 
appropriate structures for full and 
effective commodity retail 
competition. The Board was in 
the process of establishing the 
Market Design Task Force as 
the fiscal year ended. 



CONSUMERS GAS/ 
CENTRA/ UNION: 
CODE OF CONDUCT 

(EBRO 492-03/493-03/494-04) 

During the 10- Year Market 
Review, some participants 
expressed concern that LDC 
marketing affiliates established to 
provide direct purchase options 
might gain preferential access to 
monopoly services and customer 
information. The Board requested 
the Market Review Working 
Group to make recommendations 
in its report for a Code of 
Conduct to govern the relationship 
of the utilities with both affiliate 
and independent gas marketers, 
to ensure a level playing field in 
the evolving deregulated gas 
commodity market. 



J 



However, in late March 1997 Consumers Gas indicated 
that its new marketing affiliate, Consumersfirst, 
would be in operation when agency billing and 
collection [ABC] T-service commenced in May 1997. 
ABC T-service is a new direct purchase option 
approved by the Board which enables brokers to put 
their customers' gas supply costs on the utility bill 
by payment of a fee to the utility. 

The entry of Consumers first precipitated the need 
for a Code of Conduct. The Board therefore directed 
Consumers Gas to submit a draft Code by April 18 
and also directed Union and Centra to submit such 
a Code prior to the start-up of ABC T-service in 
their franchise areas. Consumers Gas and 
Union /Centra worked with the Market Review 
participants and submitted essentially the same draft 
Code, which the Board decided to review through a 
joint proceeding. 

In a Decision with Reasons issued on May 15, 1997, 
the Board reviewed parties' suggestions for an interim 
Code to allow ABC T-service to go ahead. The Board 
made a number of revisions to the draft and accepted 
the revised version as an Interim LDC Code of Conduct. 
The utilities were directed to comply with the Interim 
Code as a condition of providing ABC T-service. 

The Board disagreed with the utilities' characterization 
of the Code as voluntary. Rather, the Board considered 
the Code to be a compilation of a number of 
mandatory requirements stemming from the legislation 
and Undertakings and meeting public interest 
requirements for the operation of franchised gas 
monopoly services. 

To correct customer confusion, the Board required 
the use of a disclaimer in all advertising and other 
representations about ABC T-service, to indicate that 



the price of gas under this service is not regulated 
by the OEB. The Board also directed the LDCs to 
implement a corrective customer information program 
to make clear that agents, brokers and marketers [ABMs], 
including affiliates offering direct purchase options, 
are not subject to the OEB's control or oversight. 

In addition, the Board found that the LDC Code of 
Conduct should include an additional standard on 
Relationship Marketing and Advertising to be developed 
by the utilities in conjunction with the ABMs and 
the Working Group. The new standard should 
address how both independent and affiliate gas 
marketers utilizing ABC T-service may represent their 
relationship with the utility, to provide customers 
with greater clarity concerning the respective roles 
of the regulated utility and the unregulated ABMs. 



NATURAL GAS SYSTEM 
EXPANSION 

(EBO 188) 

In 1995 the Board, on its own motion, issued a 
Notice of Public Hearing into matters related to 
natural gas system expansion. Following a settle- 
ment conference and a review of written submissions, 
the Board released an Interim Report in August 1996 
containing decisions on issues of principle and 
directing the gas utilities to file draft guidelines and 
policies reflecting its findings. The utilities filed a 
common submission in September and various parties 
responded. A second settlement conference in early 
1997 led to a settlement agreement subscribed to by 
the utilities and some parties and a dissenting document 
prepared by other parties. 



The Board in its Final Report in 
January 1998 issued Guidelines for 
Assessing and Reporting on Natural Gas 
Distribution System Expansion in Ontario. 
The Guidelines set out the economic 
feasibility, monitoring and environ- 
mental requirements for expansion 
projects. They provide a common 
analysis and reporting framework 
to be applied by regulated Ontario 
LDCs - specifically Consumers 
Gas and Union Gas Limited. 

The main change from prior policy 
and practice is the use of a 
portfolio approach, as opposed to 
a project-by-project approach, to the 
planning, analysis, management and 
reporting of distribution expansion 
projects. The intent of the portfolio 
approach is to provide the utilities 
a greater degree of flexibility in 
determining which projects to 
undertake, while the Board retains 
overall regulatory control to ensure 
no undue cross-subsidy or rate 
impacts result from distribution 
system expansion. 



Ontario Energy Board v Auuual Ilipl 1007 - 1901! 



CONSUMERS GAS: 
MAIN RATES FISCAL 
1998 

(EBRO 495) 

In August 1997 the OEB issued 
Reasons for Decision on Consumers 
Gas' rates application for fiscal 1998, 
beginning October 1, 1997. The 
company claimed an overall revenue 
deficiency of $60.7 million, 
adjusted to $58.6 million to reflect 
the results of the settlement pro- 
posal. The Board found an overall 
revenue deficiency of $20 million, 
to be recovered from customers 
through revised rates. 

About $22.6 million of the 
$38.6 million reduction in the 
claimed revenue deficiency was 
due to the Board's finding that a 
fair rate of return on common 
equity was 10.3 per cent, rather 
than 11.5 per cent sought by the 
company. This level of return was 
derived from applying for the 
first time the Board's Draft 
Guidelines on a Formula-Based Return 
on Common Equity for Regulated 
Utilities, which use the equity risk 
premium method for determining 
the fair rate of return. The risk 
premium reflects the utility's risk 
relative to the long Canada 
bond yield. 

Of the remaining $16 million 
reduction in the claimed revenue 



deficiency, $7.7 million related to a global decrease in 
the company's forecast operating and maintenance 
expenses. The Board made specific suggestions for 
the Company to consider in reaching this overall 
budget reduction target. Other adjustments to 
claimed revenue deficiency include the reduction 
of costs resulting from transactions between the 
Company and its affiliates and imputed revenue arising 
from the Board's adoption of full costing rather 
than marginal costing for the company's 
ancillary services. 



CENTRA/ UNION: 
ADJUSTMENTS 



RATE 



(EBRO 493-04/494-06) 

In October 1997 Union and Centra requested 
approval of rate increases to reflect updated gas cost 
and transportation toll forecasts and the disposition 
of forecast balances in Union's Purchased Gas 
Variance Account and Centra's gas-cost-related 
deferral accounts. Union also sought changes to 
delivery rates to reflect load balancing costs and the 
implications of changes to the buy /sell reference 
price as directed by the Board in the last main rates 
proceeding (EBRO 493/494]. 

In November 1997 the Industrial Gas Users 
Association (1GUA] requested the OEB to make 
interim changes to the equity return component of 
the currently approved rates for Union and Centra 
by applying the adjustment mechanism in the 
Board's Draft Guidelines on a Formula-Based Return on 
Common Equity for Regulated Utilities. The Guidelines had 
been used by the Board in determining the common 
equity component of the rates for Consumers Gas 
in its most recent rates case (EBRO 495]. 



In making this request, IGUA noted its understanding 
that Union and Centra did not intend to file revised 
rates for 1998. 

During the hearing in December 1997 the Board 
issued an Oral Decision approving interim gas cost 
changes as proposed by Union and Centra, effective 
January 1, 1998. The Board then proceeded to hear 
submissions on changing the return on equity for both 
utilities and on the load balancing and related issues. 

The utilities filed information applying the adjust- 
ment mechanism in the Guidelines and agreed with 
the incorporation of the results in the final Rate 
Order in the current proceedings, if the Board 
deemed that appropriate. The resulting projected 
return on equity was 10.44 per cent for Union 
compared with 11 per cent in the EBRO 493/494 
Decision, and 10.69 per cent for Centra compared 
with 11.25 per cent in the earlier proceeding. No 
party opposed the utilities' proposals. 

In a Decision with Reasons in February 1998, the 
Board found that the changes to the respective 
returns on equity were appropriate and ordered the 
resulting rate changes to be effective January 1, 1998. 
The Board also dealt with Union's delivery rate pro- 
posals and other issues raised by the applications. 
The utilities were directed to prepare final rate 
schedules reflecting the Board's findings, to take 
effect January 1,1998. [Although Union and Centra 
merged on January 1, 1998, their rate structures 
remained separate.] 



UNION: VARY 
ORDER (CITY OF 
KITCHENER) 

(EBRO 494-05/ EBO 177-09) 

In July 1997 the City of Kitchener 
[City] filed a motion to vary the 
Board's EBRO 494/ EBO 177-09 
rate order for Union's 1997 test 
year as it relates to the M9 rate 
class. The City is one of the two 
customers in this rate class. 

The Board reviewed both its 
Decision and the Rate Order 
and did not find an inconsistency 
between them of the nature 
alleged by the City. The Board 
was of the view that the rate set 
in the Order for M9 customers 
was within the range of just and 
reasonable rates that could be set 
based on the evidence adduced in 
the hearing and the Board's findings 
in the Decision. Accordingly, the 
Board informed the City in 
September 1997 that it declined 
to hear the motion. 

The City applied for leave to 
appeal to the Ontario Divisional 
Court [General Division] in 
December 1997 and the Court 
granted leave in February 1998. 



iiaiiu 



sso 







UNION /CENTRA: 

AFFILIATE 

TRANSACTIONS 

CUSTOMER INFORMATION 
SERVICES 

(EBO 177-15) 

In September 1997 the Board 
received an application from 
Centra and Union under their 
Undertakings with the LGIC for 
approval of affiliate transactions 
related to the purchase of 
Customer Information System 
[CIS] services. The utilities 
proposed to purchase CIS services 
from a non-subsidiary affiliate, 
Union Energy Inc. [UEI] CIS 
Division, pursuant to a five-year 
contract commencing in 1998. 

The Board was satisfied that the 
Companies had provided a persua- 
sive rationale for replacement of their 
existing CIS systems as well as for 
the decision to purchase CIS services 
as opposed to developing systems 
in-house. The Board accepted the 
outsourcing of CIS services to an 
affiliate, noting that there were 
currently no third party service 
providers offering the software 
package selected. The Board's 
approval was subject to certain 
conditions including annual 
approval of specific payments and 
monitoring and reporting 
requirements. The Board also 



approved the provision of administrative services 
by Union to the UEI CIS Division, also subject to 
certain conditions. 



SEPARATION OF ANCILLARY 
BUSINESSES 

(EBO 177-17) 

In a further application dated October 1997 under 
the Undertakings, Union and Centra proposed to 
transfer to UEI their ancillary equipment rental, 
merchandise sales and financing businesses. The 
Board completed the hearing in March 1998 and a 
decision was pending at year end. 



CENTRA: FRANCHISE 
RENEWALS - ORILLIA, 
GRAVENHURST, SEVERN, 
BRACEBRIDGE 

(EBA 767/768/769/783) 

In fall 1996 Centra applied to the Board for franchise 
renewals for the City of Orillia, the Town of 
Gravenhurst, the Township of Severn and the 
Township of Bracebridge. Centra and the municipalities 
consented to a written hearing process. 

Centra proposed to use the Model Gas Franchise 
Agreement, which has formed the basis of franchise 
agreements since 1987, with no changes. The munici- 
palities sought to amend the Model Agreement so 
they could charge a permit fee for plan review and 
site inspection when Centra undertakes construction 
work on municipal highways. The municipalities 
noted that the Savings and Restructuring Act, which 
took effect in January 1996, gave municipalities the 



right, with certain restrictions, to enact bylaws 
imposing user fees. 

In its Decision with Reasons in March 1998, the 
Board indicated it was not persuaded that the new 
statutory provision precluded the prohibition of such 
fees in a franchise agreement. The new provision 
does not require municipalities to charge fees; it 
merely allows them to do so. 

The Board continues to accept that there are great 
advantages to the uniform application of a Model 
Agreement to all municipal franchises relating to the 
provision of natural gas. Uniform conditions for all 
municipalities prevent unfairness. To require a utility 
to pay user fees in some municipalities and not in 
others would result in cross-subsidies under the 
current rate structure. Nor did the Board believe 
that the resulting costs to ratepayers would be 
insignificant. Accordingly, the Board found that the 
franchise agreements should be in the model form, 
without the requested amendments. 

The Board observed that the political and financial 
climate in which municipalities operate may well have 
changed from that prevailing when the Model 
Agreement was drafted. The Board therefore directed 
Board Staff to consult with the utilities, municipalities 
and other interested parties as to the timing, potential 
issues and format for a generic proceeding to review 
the Model Franchise Agreement. 



UNION: SOMBRA 
POOL RESIDUAL GAS 
COMPENSATION 

(EBO 184) 

In May 1997 the Board issued 
Decisions with Reasons - Phase II 
regarding the compensation to be 
paid by Union to landowners in 
the Sombra Pool for residual gas 
remaining underground when 
gas was first injected in 1990. 
Sombra Pool is a designated gas 
storage area in Lambton County. 
In the Phase I Decision with 
Reasons in September 199S, the 
OEB found that there was no 
enforceable agreement among the 
parties as to compensation and 
the Board would therefore proceed 
to determine the matter. 
Following a settlement process, a 
hearing was held in March 1997. 

In its ruling the Board concluded 
that compensation for the residual 
gas should be made on the basis 
of a royalty, in line with Ontario 
precedent. The Board found that 
the appropriate royalty rate was 
6V4 per cent of the market price 
of gas, to be applied to the 
agreed volumes. The Board also 
ordered payment of interest 
calculated in accordance with the 
settlement agreement. 



Ontario toy? tail v Annual lienim 109? - 1998 




CANENERCO: 
STORAGE RIGHTS 
AND PIPELINE 
CONSTRUCTION 

(EBO201/EBLO263) 

CanEnerco Limited produces oil 
and gas from seven pools in 
southwestern Ontario and sells 
gas to marketers at points outside 
the province. In June 1997 the 
Company applied to the Board 
for authorization to inject, store 
and remove gas from the 
Chatham 7-17-XII Pool. It also 
sought leave to construct 5.8 km 
of NPS 10 [nominal pipe size 10" 
diameter] pipeline to connect the 
pool to Union's transmission 
system, and to construct gathering 
lines and other facilities. CanEnerco 
indicated that it intended to use 
the Chatham Pool as a seasonal 
storage facility for its own gas and 
had no plans to offer storage 
services to third parties. 



n its Decision with Reasons in 
February 1998, the Board granted 
the requested storage rights for 
an initial term of five years, subject 
to certain conditions. The Board 
believed this Decision represented 
a fair balance between CanEnerco's 
current business plans and the need 
to safeguard the public interest over 
the long run. 



The Board noted that geological formations suitable 
for gas storage are a provincial resource that require 
protection and assurance they are being used in the 
public interest. The Board believed it was consistent 
with provincial policy to ensure that, if the Chatham 
Pool should be needed to provide storage services 
for the Ontario market in the future, it can be made 
available for this purpose. When applying for renewal 
or extension of the term, CanEnerco will be expected 
to show that continued use of the pool to store its 
own gas is in the public interest. 

The Board granted the storage rights despite the 
fact that it was unable to assess the profitability of 
the seasonal operation, noting that the economic 
risk of the project falls entirely on the Company's 
owners and does not affect utility ratepayers. The 
Board denied the request for leave to construct the 
NPS 10 line, as CanEnerco's discussions with Union 
on the proposed interconnection to Union's trans- 
mission system were only in the preliminary stages 
and questions regarding the route were unresolved. 
The Board did, however, grant leave to construct 
the gathering lines, subject to conditions, to permit 
the pool to be used as a storage facility. 



List Of Proceedings 



The following is a tabular listing of all proceedings arising from applications and references received or initiated by 
the Board during the fiscal year ended March 31, 1998. Also listed are proceedings arising in earlier years and dealt 
with by the Board in the 1997-98 fiscal year. 






CASE 
TYPE 



FILE 
NUMBER 



APPLICANT 



CASE DESCRIPTION 



DECISION/ORDER 
ISSUED 



Natural Gas Rates Applications 






EBRO 


491-01 


NRG 


Amendments to Rate 3 Schedule 


May 22, 1997 


EBRO 


492-03/493-03/ 
494-04 


Consumers Gas/ 
Centra/Union 


Market Review and LDC 
Code of Conduct 


May 15, 1997 


EBRO 


493-04/494-06 


Union 


Gas cost motions 


Partial - 

December 9, 1997/ 
Final - 
February 10, 1998 


EBRO 


493-05/494-07 


Union 


Quarterly Rate Adjustment 


In progress 


EBRO 


494-03 


Union 


Motion to reopen hearing respecting 
storage contracting 


September 26, 1997 


EBRO 


494-05 


Union 


Motion by City of Kitchener to vary 
the Board's final Rate Order 


September 23, 1997 


EBRO 


494-08 


Union 


Rates associated with transmission 
and storage of gas for M12 
customers 


In progress 


EBRO 


495 


Consumers Gas 


Main Rates Fiscal 1998 


August 21, 1997 


EBRO 


496 


NRG 


Main Rates Fiscal 1998 & 1999 


In progress 


EBRO 


496-01 


NRG 


Main Rates Fiscal 1998 & 1999 - 
Interim 


September 26, 1997 


EBRO 


497 


Consumers Gas 


Main Rates Fiscal 1999 


In progress 


EBRO 


497-01 


Consumers Gas 


Incentive mechanisms in relation to 
O&M and DSM 


In progress 


Pipeline Construction 








EBLO 


258 


Consumers Gas 


Black Creek and Coveny Pools 


June 19, 1997 


EBLO 


259 


Union 


Village of Wiarton, Town of 
Southampton, Township of Saugeen 


April 30, 1997 


EBLO 


260 


Consumers Gas 


Perth Reinforcement Project 


July 16, 1997 



Ontario Euergj lioanl <- /tmual Report mi - \m 






CASE FILE 

TYPE NUMBER 



APPLICANT 



CASE DESCRIPTION 



DECISION/ORDER 
ISSUED 



EBLO 


261 


Consumers Gas 


EBLO 


262 


Consumers Gas 


EBLO 


263 


CanEnerco Ltd. 


EBLO 


264 


Union 


EBLO 


265 


Union 



Township of Clearview 

East Valley Reinforcement Project 

Chatham 7-17-XII Pool 

Lennox Project 

Townships of Opasatika, 
Cargill and Cumming 



July 4, 1997 
September 30, 1997 
February 4, 1998 
In progress 
In progress 



Franchise Renewals 








EBA 


764 


Consumers Gas 


City of Brockville 


July 25, 1997 


EBA 


767 


Centra 


City of Orillia 


March 31, 1998 


EBA 


767-01 


Centra 


City of Orillia 


June 25, 1997 


EBA 


768 


Centra 


Town of Gravenhurst 


March 31, 1998 


EBA 


768-01 


Centra 


Town of Gravenhurst 


June 25, 1997 


EBA 


769 


Centra 


Township of Severn 


March 31, 1998 


EBA 


769-01 


Centra 


Township of Severn 


June 25, 1997 


EBA 


770 


Centra 


Township of Oro-Medonte 


November 3, 1997 


EBA 


770-01 


Centra 


Township of Oro-Medonte 


June 25, 1997 


EBA 


782 


Consumers Gas 


Township of King 


April 14, 1997 


EBA 


783 


Centra 


Town of Bracebridge 


March 31, 1998 


EBA 


783-01 


Centra 


Town of Bracebridge 


June 25, 1997 


EBA 


784 


Consumers Gas 


Town of Collingwood 


May 26, 1997 


EBA 


786 


Union 


Township of Blandford-Blenheim 


May 28, 1997 


EBA 


787 


Consumers Gas 


Town of Hawkesbury 


April 23, 1997 


EBA 


789 


Centra 


Town of Vankleek Hill 


October 21, 1997 


EBA 


789-01 


Centra 


Town of Vankleek Hill 


April 23, 1997 


EBA 


790 


Centra 


Township of Lochiel 


September 5, 1997 


EBA 


791 


Centra 


Town of Longueuil 


In progress 


EBA 


791-01 


Centra 


Town of Longueuil 


October 6, 1997 



[ 



CASE FILE 

TYPE NUMBER 



APPLICANT 



CASE DESCRIPTION 



DECISION/ORDER 
ISSUED 



EBA 
EBA 
EBA 
EBA 
EBA 
EBA 
EBA 
EBA 
EBA 

EBA 
EBA 
EBA 
EBA 
EBA 
EBA 
EBA 
EBA 
EBA 
EBA 
EBA 
EBA 
EBA 
EBA 
EBA 
EBA 
EBA 
EBA 



792 


Centra 


793 


Centra 


795 


Consumers Gas 


795-01 


Consumers Gas 


796 


Consumers Gas 


797 


Consumers Gas 


798 


Consumers Gas 


799 


Consumers Gas 


800 


Consumers Gas 


801 


Consumers Gas 


802 


Consumers Gas 


803 


Centra 


804 


Centra 


805 


Centra 


806 


Centra 


807 


Union 


808 


Union 


809 


Consumers Gas 


810 


Consumers Gas 


811 


Consumers Gas 


812 


Consumers Gas 


813 


Consumers Gas 


814 


Consumers Gas 


815 


Consumers Gas 


816 


Consumers Gas 


817 


Consumers Gas 


819 


Consumers Gas 



Town of McNab 

Township of Ross 

Town of Aurora 

Town of Aurora 

Township of Lancaster 

Township of Horton 

Township of Kenyon 

Township of Stafford and Pembroke 

Township of Front of Leeds 
and Lansdowne 

Township of South Elmsley 

Town of Perth 

Village of Cardinal 

Town of Dryden 

Township of Thurlow 

County of Prince Edward 

City of Owen Sound 

Township of West Hawkesbury 

Township of Oro-Medonte 

Township of Montague 

Town of Midland 

Town of East Gwillimbury 

Township of Tay 

Township of Kitley 

Township of Tiny 

Town of Am prior 

Township of Elizabethtown 

Township of Ramsay 



September 25, 1997 
September 25, 1997 
October 31, 1997 
April 23, 1997 
July 8, 1997 
July 8, 1997 
June 13, 1997 
June 13, 1997 
November 3, 1997 

July 8, 1997 
August 12, 1997 
September 29, 1997 
November 12, 1997 
September 25, 1997 
October 16, 1997 
October 21, 1997 
October 20, 1997 
November 24, 1997 
November 24, 1997 
December 5, 1997 
October 21, 1997 
Decembers, 1997 
Decembers, 1997 
Decembers, 1997 
Decembers, 1997 
Decembers, 1997 
Decembers, 1997 



Uniaiiu Luciyy Ltoaiu Annual lluitoit 1997 199U 



I 



CASE FILE 

TYPE NUMBER 



APPLICANT 



CASE DESCRIPTION 



DECISION/ORDER 
ISSUED 



EBA 


820 


Consumers Gas 


Township of Springwater 


EBA 


821 


Consumers Gas 


Township of Smiths Falls 


EBA 


822 


Consumers Gas 


Township of North Elmsley 


EBA 


823 


Consumers Gas 


Township of Goulboun 


EBA 


824 


Consumers Gas 


Town of New Tecumseth 


EBA 


825 


Centra 


Township of Pittsburgh 


EBA 


825-01 


Centra 


Township of Pittsburgh 


EBA 


826 


Union 


Township of St. Vincent 


EBA 


827 


Consumers Gas 


Town of Georgina 


EBA 


827-01 


Consumers Gas 


Town of Georgina 


EBA 


828 


Consumers Gas 


Township of West Carleton 


EBA 


829 


Consumers Gas 


Town of Whitchurch-Stouffville 


EBA 


829-01 


Consumers Gas 


Town of Whitchurch-Stouffville 


EBA 


830 


Centra 


Township of Cornwall 


EBA 


830-01 


Centra 


Township of Cornwall 


EBA 


831 


Consumers Gas 


Town of Lindsay 


EBA 


831-01 


Consumers Gas 


Town of Lindsay 


EBA 


832 


Consumers Gas 


Township of Drummond 


EBA 
EBA 


833 
834 


Union 
Consumers Gas 


City of Sarnia 
Township of Beckwith 


EBA 


835 


Union 


Town of Greater Napanee 


EBA 


836 


Consumers Gas 


Town of Almonte 


EBA 


836-01 


Consumers Gas 


Town of Almonte 


EBA 


837 


Consumers Gas 


Township of Charlottenburgh 


EBA 


838 


Consumers Gas 


City of Kanata 


EBA 


839 


Consumers Gas 


Township of Severn 


EBA 


839-01 


Consumers Gas 


Township of Severn 


EBA 


840 


Consumers Gas 


Town of Carleton Place 



January 23, 1998 
March 4, 1998 
March 26, 1998 
January 23, 1998 
December 12, 1997 
In progress 
September 9, 1997 
January 15, 1998 
In progress 
September 16, 1997 
March 20, 1998 
In progress 
September 19, 1997 
In progress 
October 6, 1997 
March 31, 1998 
September 19, 1997 
March 26, 1998 
In progress 
January 23, 1998 
In progress 
March 13, 1998 
October 3, 1997 
December 30, 1997 
January 8, 1998 
In progress 
January 19, 1998 
In progress 



LI 



CASE FILE 

TYPE NUMBER 



APPLICANT 



CASE DESCRIPTION 



DECISION/ORDER 
ISSUED 









EBA 
EBA 
EBA 
EBA 
EBA 
EBA 
EBA 
EBA 

EBA 
EBA 
EBA 



840-01 

847 

847-01 

848 

848-01 

849 

849-01 

850 

851 
852 
853 












EBC 
EBC 
EBC 
EBC 
EBC 
EBC 
EBC 
EBC 
EBC 
EBC 
EBC 
EBC 
EBC 



248/EBA 750 
250/EBA 751 
253/EBA 754 
254/EBA 755 
256/EBA 772 
257/EBA 773 
258/EBA 774 
259/EBA 775 
260/EBA 776 
261/EBA777 
262/EBA 778 
263/EBA 779 
264/EBA 780 



Consumers Gas 


Town of Carleton Place 


January 7, 1998 


Consumers Gas 


Township of Innisfil 


In progress 


Consumers Gas 


Township of Innisfil 


January 7, 1998 


Consumers Gas 


Township of Ops 


In progress 


Consumers Gas 


Township of Ops 


March 2, 1998 


Consumers Gas 


Township of Clarington 


In progress 


Consumers Gas 


Township of Clarington 


March 2, 1998 


Union 


Townships of Casmir, Jennings 
and Appleby 


In progress 


Consumers Gas 


Township of Manvers 


In progress 


Consumers Gas 


Township of North Glengarry 


In progress 


Consumers Gas 


Township of Percy 


In progress 


iise Applications 






Northern Cross Pipelines 


Township of Ashfield 


Closed 


Northern Cross Pipelines 


Township of West Wawanosh 


Closed 


Centra 


Village of Finch 


April 18, 1997 


Centra 


Township of Finch 


May 2, 1997 


Union 


Town of Port Elgin 


April 30, 1997 


Union 


Town of Southampton 


April 30, 1997 


Union 


Town of Wiarton 


April 30, 1997 


Union 


Village of Tara 


April 30, 1997 


Union 


Village of Shallow Lake 


April 30, 1997 


Union 


Village of Hepworth 


April 30, 1997 


Union 


Township of Arran 


April 30, 1997 


Union 


Township of Saugeen 


April 30, 1997 


Union 


Township of Amabel 


April 30, 1997 



Ontario Eiieiyylloaid < Annul Report 1997-1998 



[ 



CASE 


FILE 


APPLICANT 


TYPE 


NUMBER 




EBC 


265/EBA 781 


Union 


EBC 


266/EBA 785 


Consumers Gas 


EBC 


268/EBA 788 


Centra 


EBC 


269/EBA 794 


Centra 


EBC 


271/EBA 818 


Consumers Gas 


EBC 


272/EBA 841 


Consumers Gas 



CASE DESCRIPTION 



DECISION/ORDER 
ISSUED 






Certificate of Public Convenience and Necessity 



EBC 


223 


Consumers Gas 


EBC 


267 


Centra 


EBC 


270 


Consumers Gas 


EBC 


277 


Potter Station 


EBC 


278 


Union 


EBC 


279 


Union 


Pipeline Exemptions 




PL 


98 


Consumers Gas 


PL 


99 


Union 



PL 



PL 



100 



101 



Union 



Union 



Uniform Accounting Orders 

UA 106-01 Unii 

UA 109 

UA 110 Union/Centra 



Union 
NRG 



Township of Keppel 


April 30, 1997 


Township of Clearview 


July 4, 1997 


Township of Barclay 


July 28, 1998 


Township of Mountain 


August 20, 1997 


Village of Athens 


January 20, 1998 


Village of Chalk River 


In progress 


Township of East Garafraxa 


September 2, 1997 


Township of Zealand 


July 28, 1997 


Township of the Rear of Yonge 
and Escott 


January 20, 1998 


Unorganized Township of Stoddart 


In progress 



Township of Opasatika 


In progress 


Townships of Cargill and Cumming 


In progress 


Community of Carp 


August 13, 1997 


Leamington North Reinforcement 
Project 


July 25, 1997 


London South Reinforcement 
Project 


September 12, 1997 


Nanticoke Area Reinforcement 
Project 


January 27, 1998 


High Temp Plastic Vents 
(supplemental) 


August 28, 1997 


Consultants for long term financing 
strategy report 


Septembers, 1997 


One time costs associated with 
amalgamation of Centra & Union 


July 16, 1997 



[ 



CASE FILE 

TYPE NUMBER 



APPLICANT 



CASE DESCRIPTION 



DECISION/ORDER 
ISSUED 



UA 


111 


Consumers Gas 


Comprehensive Customer 
Information Plan 


September 11, 1997 


UA 


112 


Centra 


CIP deferral account 


in progress 


UA 


113 


Centra 


Incremental costs associated with 
the Ten Year Market Review 


July 17, 1997 


UA 


114 


Union 


Energy balancing option to large 
industrial customers 


November 18, 1997 


UA 


115 


Union 


Market based rates for long term 
storage 


In progress 


UA 


116 


Consumers Gas 


Heating Value Differential Account 


In progress 


UA 


117 


Consumers Gas 


Union Gas Deferral Account 


In progress 


UA 


118 


Consumers Gas 


Costs associated with unbundling 


In progress 


UA 


119 


Consumers Gas 


Increase in municipal taxes as a 
result of Bills 106/149 


In progress 


UA 
UA 


120 


Union 


Costs associated with municipal tax 
increases as a result of Bills 106/149 


In progress 


121 


Consumers Gas 


Incremental costs associated with 
remediating Year 2000 system 
implications 


In progress 


Approvals Under Current Undertakings 






EBO 


177-11 


Union 


Acquisition of CIS Services from 
Westcoast 


April 3, 1997 


EBO 


177-12 


Union 


Transfer of Westcoast Energy Inc. 
Part V.I tax liability for 1997 Tax Year 


June 11, 1997 


EBO 


177-13 


Union 


Purchase of firm delivery gas from 
Engage Energy 


April 28, 1997 


EBO 


177-14 


Union 


Windup of Union's investment in 
Mercap Insurance Limited 


August 29, 1997 


EBO 


177-15 


Union 


Provision of Customer Information 
Services 


December 24, 1997 


EBO 


177-16 


Union 


Investment in Ford Cogeneration 
Project 


September 29, 1997 


EBO 


177-17 


Union 


Transfer of ancillary services 


In progress 



Outuiiu Energy tad ■ Anmial Bepuit 1997 - 1998 






CASE FILE 

TYPE NUMBER 



APPLICANT 



CASE DESCRIPTION 



DECISION/ORDER 
ISSUED 





EBO 


179-10 


Consumers Oas 


IPL Technology and Consulting 
Services - computer based training 


November 13, 1997 




EBO 


179-11 


Consumers Gas 


Joint venture with TransAlta Energy 


February 26, 1997 




EBO 


179-12 


Consumers Gas 


To provide engineering and market 
analysis to CGEI 


July 18, 1997 




EBO 


179-13 


Consumers Gas 


To provide support to CGEI for 
natural gas distribution in 
the Maritimes 


October 27, 1997 




EBO 


179-14 


Consumers Gas 


Transfer of CIS to an affiliate 


In progress 




EBO 


179-15 


Consumers Gas 


Transfer of certain businesses and 
activities to an affiliate 


In progress 




Other Matters 










EBA 


717 


Metalore Resources 
Limited 


Limited Franchise Approval - 
Norfolk County 


Closed 




EBO 


184 


Landowners 


Sombra Pool 


May 22, 1997 




EBO 


188 


Ontario Energy Board 


System Expansion 


Aug. 15, 1996- 
Interim/Final - 
January 30, 1998 




EBO 


196 


Consumers Gas 


Black Creek and Coveny Pools 


June 19, 1997 




EBO 


197 


Consumers Gas 


Black Creek and Coveny Pools 


June 19, 1997 




EBO 


198 


Consumers Gas 


Black Creek and Coveny Pools 


June 19, 1997 




EBO 


200 


Union 


Off Peak Storage - St. Clair Pipelines 


May 30, 1997 




EBO 


201 


CanEnerco Ltd. 


Inject., store, remove Gas from 
Chatham 7-17-Xll Pool 


February 4, 1998 




EBO 


202 




Legislative Change for Natural Gas 
Deregulation 


December 16, 1997 






EBO 


" 


Consumers Gas 


Agreement with Centra for storage, 
compression and transmission 
services 


October 1,1997 




EBO 


204 


Union 


Off peak storage agreement with 
Engage Energy 


In progress 




EBRM 


108 


Consumers Gas 


Black Creek and Coveny Pools 


June 19, 1997 




EBRM 


109 


CanEnerco Ltd. 


Drilling Permits Chatham 
7-17-XII Pool 


February 4, 1998 



Glossary of Terms 



Agency Billing and Collection (ABC) T-Service 

A service that enables natural gas brokers to bill their customers through the LDC for 
gas supplies purchased directly from producers. The name of the broker and the gas 
supply charges appear on the customer's monthly utility bill, and the LDC collects the 
gas supply charges on behalf of the broker for a fee. The price the customer pays for 
gas is not regulated by the OEB. 

Bulk Power Rates 

The wholesale rates that Ontario Hydro charges municipal utilities and direct industrial 
customers. 

Buy/Sell 

An arrangement under which end-users or their agents buy gas directly from producers, 
sell the gas to the local utility for transportation to a site served by the utility's distribution 
network, and then buy gas upon delivery at the regular retail rate. 

Buy /Sell Reference Price 

The price, approved by the OEB, which an LDC pays for a direct-purchase customer's 
gas supplies. The reference price is based on the utility's weighted average cost of gas. 
The gas becomes part of the utility's system supplies and the customer pays the LDC's 
regular retail rate, which includes transportation costs, for gas consumed at the burner tip. 
Buy/sell customers benefit when they or their agents are able to purchase gas supplies 
from producers at a lower cost than the utility's buy/sell reference price. The customer 
usually receives a rebate, generally representing a portion of the difference between the 
price paid to the producer and the buy-sell reference price paid by the LDC. 

LDC 

Local distribution company. 

Non-Subsidiary Affiliate 

A subsidiary of the parent company of a utility, but not of the utility itself. 

PGVA 

The Purchased Gas Variance Account maintained by a utility to track the difference between 
the forecast and actual cost of gas. 



Rate Base 



The amount that a utility has invested in fixed assets that are used or are useful in providing 
service, net of accumulated depreciation, plus an allowance for working capital and any other 
items which the Board may determine. 



Ontario Eueiyy ted > Annual liipl 191!'/ - 19511! 



Rate of Return on Common Equity 

Utility income applicable to the common equity component of a utility's total capital, that a 
utility earns or is authorized to earn, expressed as a percentage of the amount of common 
equity approved for inclusion in the utility's capital structure. 

Revenue Deficiency 

The shortfall between the revenues required to achieve the allowed annual level of earnings 
previously established by the Board and the revenues that will be produced with currently 
approved rates. 

Revenue Excess (or Revenue Surplus) 

The difference, if positive, between the annual level of earnings that will be produced with 
currently approved rates, and the allowed level of earnings established by the Board. 

Revenue Requirement # 

The amount of revenue that a utility must recover through rates to cover its costs of providing 
service. The costs include such items as: operating and maintenance expenses, depreciation, 
taxes and the return on capital employed. 



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